TORONTO (Reuters) ? Toronto's main stock index rose more than 2 percent on Wednesday morning as resource issues jumped on an agreement by global central banks to tackle the euro zone debt crisis and a move by China to ease credit strains.
Commodity prices, particularly for oil, gold and base metals, rose on renewed investor optimism for the global economy, lifting the TSX's heavily weighted materials sector, which rose more than 3 percent.
Goldcorp was up 4.8 percent at C$53.70 and Barrick Gold gained 2.6 percent to C$52.81, leading the gold subsector's rise. The gains came as bullion prices climbed more than 2 percent in response to a falling U.S. dollar as central banks moved to inject more liquidity into the global financial market.
Oil and gas issues continued their rally, jumping 3.5 percent as U.S. crude rose above $100 a barrel to reach its highest level in two weeks.
Suncor Energy jumped 4.3 percent to C$30.50 to lead energy gains. Canadian Natural Resources was also strong, rising 4 percent to C$37,82.
The Toronto Stock Exchange's S&P/TSX composite index was up 290.42 points, or 2.5 percent, at 12,023.36 by mid-morning. It was the index's biggest rise in a month.
The move by the TSX mirrored hefty gains on other global markets as central banks from the world's leading economies, including the Bank of Canada, the U.S. Federal Reserve and the European Central Bank, agreed to lower the cost of dollar swap lines by 50 basis points, as well other measures.
The global rally started earlier in the day when China's central bank moved to ease credit strains by cutting reserve requirements for its commercial lenders by 50 basis points - it's first drop in nearly three years.
The move, which is expected to free up funds that could be used for lending to cash-strapped small firms, came as China's economic growth has eased for three straight quarters due to tight credit at home and flagging demand overseas.
The Chinese shift to an easing policy and the co-ordinated move by the central banks came in response to concerns the euro zone's debt crisis would cause another global slowdown.
Canadian equities markets were "internally very oversold" over the last 10 days as worries about European debt contagion led to repeated selloffs, said Sid Mokhtari, market technician and director, institutional equity research, CIBC World Markets.
"You just needed a cause and you've got the catalyst this morning from China and from the co-ordinated effort of all the central bankers," said Mokhtari. "They needed to give it a jolt and they did, and the market's responding accordingly."
The TSX financial sector, which has little direct exposure to European debt assets, had its best jump in a month, rising 2.6 percent on the strengthened European outlook.
Royal Bank of Canada led the way, gaining 3 percent to C$46.37.
In individual company news, TMX Group was down 2.9 percent to C$43.47 after the competition regulator said it has "serious concerns" about a C$3.8 billion proposal by Maple Group to take over the owner of the country's largest equity exchange.
($1=$1.02 Canadian)
(Editing by Rob Wilson)
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